How investors really read your information memorandum — and what they skip
The deck gets you the meeting. The IM is read by analysts on a Saturday morning with a checklist. Most founders write IMs as if they will be read like a deck. They are not.
An information memorandum is not a long deck. It serves a different reader. A deck is read by a partner who already half-believes. An IM is read by an analyst who is allergic to risk.
Here's the order analysts actually read it in. Executive summary — three minutes. Financial snapshot — they go straight to the model tab open in another window and tie out the numbers. Customer concentration — they want to see the top-five customer dependency. Key-person risk — who walks and the business is in trouble. Cap-table and history of dilution — they want to see what previous rounds looked like, what the cap-table has gone through, and how much has been signed away in side letters. Then they go back to the top and read the rest.
Most founder-written IMs spend forty pages on the market opportunity and three on the financial model assumptions. Investors give the market opportunity ninety seconds. They give the model assumptions thirty minutes. Worse: founders often hide the awkward parts deep in the document, expecting they will not be read. They are read first.
What we build, structurally, looks like this. Section 1: 90-second read of what the company does, why now, and what the round funds. Section 2: financial summary with three statements. Section 3: customer and revenue concentration with two years of cohort retention. Section 4: cap-table and ownership history. Section 5: key people and what their roles are. Section 6: the FAQ pack — every awkward question, answered in advance, so the diligence call ends in 45 minutes instead of three hours.
The hardest section is the FAQ pack. We sit with the founder for half a day and write every question an investor will ask. Why is gross margin so low. Why does CAC look like that. Why did the previous CFO leave. Why is your largest customer also your largest shareholder. The questions are the awkward ones. The answers are honest, with the underlying numbers shown.
Founders sometimes resist this. They worry that surfacing every concern up front kills the deal. The opposite is true. The investor was going to find it anyway in week three of diligence, in a far more damaging way. Showing it on page eight of the IM with the data already laid out turns a possible deal-killer into a non-event. That's the whole job of the IM.
